Shaping the Future of the Kurdistan Region

PM Nechirvan Barzani provides IIG with exclusive insight into the importance of the KRG’s Human Capacity Development Program, the major structural reforms that the KRG achieved, the key sectors for job creation, the role of oil and gas sector in terms of development, and the significance of open dialogue for solving the regional problems.

What are the main pillars of the KRG’s policy that will allow the Region to continue the momentum that it has gained in recent years?There are three key elements to our success. First, we have provided a stable and secure environment for our people and for our businesses to develop. Without this, and without the support and cooperation of our people with our security forces, what you see today in the Kurdistan Region would not have been possible.

Second, we are trying to use our limited resources to develop the infrastructure – both physical and human – to allow our economy to grow and our people to enjoy the benefits of this growth.

Finally, we have taken bold and creative steps in the area of energy development and foreign investment to ensure that international companies, including blue-chips, establish a presence here and help us to develop our energy resources.

What structural improvements has the KRG achieved in terms of reforming the administrative system?Our administrative system has evolved a great deal since the early 1990s when we began from scratch, but we still have far to go.

It is important to note that in 1991, after the establishment of the safe haven and no-fly zone, Saddam Hussein withdrew not only his troops but the entire administration and public services in the Kurdistan Region. Overnight, we had to step in and take over schools, hospitals, and the running of a region that had been devastated by genocide, chemical bombardment and the destruction of thousands of villages.

I’m proud that our people stepped up to this challenge and we were able to cope, despite the shortcomings and sacrifices people had to make. For example, there were times when there weren’t sufficient funds to pay teachers’ salaries but they continued to work because they didn’t want the next generation’s education to suffer as theirs had.

We have invested in training civil servants, published the KRG’s oil contracts, participated in internationally-recognized transparency initiatives, and created a specific department within the Council of Ministers to promote and implement meaningful measures to fight corruption and promote transparency.

In the two decades since then, we have been able to improve in many areas. We took a significant step forward in 2006 when the Erbil and Slemani administrations were unified. We have adopted laws that promote accountability and transparency. We have invested in training civil servants, published the KRG’s oil contracts, participated in internationally-recognised transparency initiatives and created a specific department within the Council of Ministers to promote and implement meaningful measures to fight corruption and promote transparency.

The KRG is working closely with the UK National School of Government to build and improve human capacity and further develop our public services. We have also signed a long-term agreement with PricewaterhouseCoopers (PwC) to develop and implement our good-governance and transparency strategy. These important initiatives are also strongly supported and promoted by the KRG Department of Foreign Relations and KRG Board of Investment as both work closely in conveying our messages and needs to the international community.

We have made substantial progress and the public has high expectations of its government, so we will continue to try to minimise bureaucracy and promote transparency.

What is the medium-term policy of the KRG in terms of prioritizing key areas for investment and development?We have three priority sectors: agriculture, industry, and tourism. This Region was once the breadbasket of Iraq and the majority of the workforce worked in agriculture until the 1970s. But the destruction of our villages and the conflict with the former regime left the countryside destroyed and empty of people. We need to rebuild the agriculture sector to create jobs, ensure Kurdistan Region’s food security and to produce, market and export our products to the world.

Tourism is another sector that can help revive the countryside, as well as our cities, and provide jobs. Our Region has a rich heritage and a people with a welcoming culture. It’s time we used these to advantage our society.

We also want to focus on industry as a way of bringing Kurdistan Region’s economy into alignment with other countries in order to become a producer and not just consumer.

We have given these three sectors priority because we don’t want to be over-reliant on oil and gas, but it doesn’t mean that the other industries are not important. We need investment in many sectors.

We have taken bold and creative steps in the area of energy development and foreign investment to ensure that international companies, including bluechips, establish a presence here and help us to develop our energy resources.

What role can the oil and gas industry play in the development and stability of the Kurdistan Region, as well as in furthering relations with neighbouring countries?The liberation of Iraq has given us many opportunities, one of them is that for the first time in our history we are able to manage our natural resources and to use them for the good and prosperity of the Kurdistan Region. Electricity is no longer in short supply, even though demand is increasing rapidly as our economy grows. We can plan for the future as we will have an income that will benefit us and the whole of Iraq.

At the same time, having this resource is helping us to further our cooperation with our neighbors and to put this Region on the world energy map. Turkey is an important neighbor and an influential player in the Middle East. Its growing economy means that its demand for energy will increase. We have that resource and we can use it so that we all benefit.

Kurdistan Region is also strategically placed as such that countries in Europe are now considering our assets when they reflect on their energy security. These developments create win-win situations.

I would like to add that our oil contracts, whether with an oil major or a medium-sized company, have a positive impact at a community level as well. In all of the contracts there is the social responsibility agreement with the companies, including infrastructure and human capacity development, building homes, schools, hospitals, and other services critical to the needs of our people. This is something that is often overlooked by the local and international press.

What policies will the KRG pursue in order to strengthen the financial sector in particular so as to support this progress?We lack a modern and productive financial system. Access to credit, to trade financing, and the development of a consumer and corporate credit market are essential to further the Region’s economic development. This is a problem that affects all of Iraq. We have seen some small steps, but there is much work to be done.

We are planning legislation to promote the financial sector, such as insurance, and we plan to create institutions such as the Erbil Stock Exchange to give a platform for local companies to raise funds.

Several international banks have a presence here but we need more of them and we need them to offer more services, particularly to businesses. We also need a banking system that offers mortgages so that housing can become more affordable for those on lower incomes.

We have seen several small steps from international banks here, and we anticipate more in the future?With the rise of a younger generation that is increasingly well qualified, which sectors do you expect will offer the most opportunities for job creation?Our young people, like those in many other countries in the Middle East and Asia, look to the government for jobs. The pension is attractive to them and the idea that they can have a job for life. We want to move people away from that and to make the private sector much more attractive and dynamic. To achieve that there needs to be a better balance between public and private sector pensions and a realisation among our young people that quite often the private sector offers better pay and opportunities.

Outside of the public sector, the retail and hospitality industries as well as construction offer many jobs. In the future, we hope the oil and gas sector will provide more jobs to local people.

As we revive our industry, tourism, and agriculture sectors we hope they too will be hubs for job-creation.

How significant is it for the KRG to strengthen its civil society in order to promote the democratic voice of the Kurdistan Region worldwide?In 1992, when we had our first parliamentary elections, we reserved five seats out of 105 for minorities, and this policy continues today. We demonstrated then, as we do now, that our success as citizens of the Kurdistan Region is intertwined.

We have done much to protect women’s rights and to try to prevent violence against women. For example, there is a 30 per cent quota for female members of parliament and we have provided training for the police in tackling the issue of honor-based violence. But we need to do more and we need to continually be vigilant that we aren’t becoming complacent.

Where possible, the KRG has worked hand-in-hand with non-governmental organisations to promote the well-being of our citizens, be they ethnic or religious minorities or women.

The KRG also provides stipends and resources to many groups to carry out research or to take care of vulnerable groups, without trying to influence their work.

Today we are praised for not only protecting minorities but in providing refuge to those fleeing from violence in other parts of Iraq and in Syria, which brings me to how we are viewed internationally and within Iraq.

We have promoted dialogue and peace, not only in the Kurdistan Region and Iraq, but also with neighbouring countries. We have been committed to forging democracy in Iraq, even though there have been major setbacks. We are committed to promoting the dialogue towards peace in Turkey.

Such issues require leadership and a realistic approach that acknowledges that there will be stumbling blocks on the way, but engaging in a peace process or dialogue, even if it appears to be progressing slowly, is always better than conflict.

All these efforts complement one another to send a strong message to the international community that we genuinely believe in democracy, the rule of law, and being a source of stability.

What is your key message to the globally engaged business and investment community?My message is that Kurdistan Region is open for business and there are many opportunities here for those who wish to be part of this Region’s historic turnaround from being an oppressed, neglected part of the world to being a democratic society with a dynamic, investor-friendly economy.

The KRG supports investors by offering incentives for strategic projects, especially those in line with the needs of our people and government.

Our rich and vibrant region can be used as a platform for doing business in all of Iraq. This Region is not just a market for 5 million people, but has access to a market for over 30 million.